Parks: 43% of U.S. Broadband Households With Pay-TV Likely to Switch to Online TV in Next 12 months

New data from Parks Associates found 43% of U.S. broadband households with pay-TV are likely to switch to an online TV platform in the next 12 months. While the absence of live sports and live performances during the coronavirus pandemic created challenges for online TV, services such as Hulu + Live TV and YouTube TV have been able to push the advantages in pricing, content and platform flexibility to drive subscriber growth.

Disney-owned Hulu with Live TV is now the largest online TV platform, with more than 4 million subscribers.

“Subscriber losses in traditional pay-TV continue, while the online TV category continues to grow, thanks to consumer price sensitivity and preferences for platform flexibility,” senior analyst Paul Erickson said in a statement. “Traditional pay-TV operators have online delivery in their roadmaps, if not already deployed. We expect online TV will continue to grow dramatically, and will gradually become the dominant offering in the pay-TV landscape.”

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Parks found that 17% of online TV subs switched from traditional pay-TV within the last twelve months. The factors driving defections include pricing and perceived value, while consumers positively respond to the flexibility of online TV to deliver unique and targeted content packages on a variety of connected entertainment platforms.

Prior to the pandemic’s effects on streaming video consumption, online TV sub growth was waning, with some services posting continued losses. Though COVID-19 has driven growth and in some cases recovery in the category, recent increases in online TV pricing make it uncertain how consumers will respond long term.

“Online TV has substantial opportunity if they can avoid the pitfalls that typically drive pay-TV customer dissatisfaction, such as rising prices and inflexible content and platform options,” Erickson said. “With content prices rising and competition increasing, online TV should remain conscious of consumer price sensitivity while keeping a strict adherence to a consumer-centric experience.”

Philo Launches AccuWeather Service via Online TV Platform

Online television service Philo Jan. 26 announced that it is adding AccuWeather to its line-up of entertainment, lifestyle and knowledge-based programming for its 800,000 subscribers. Philo’s standard $20 monthly subscription package features more than 60 channels from networks, including A&E, AMC, Comedy Central, Discovery Channel, Food Network, Hallmark Channel, ID, Lifetime, MTV, Nickelodeon, OWN, TLC, TV One and WE tv, among others.

AccuWeather TV Network delivers 24/7 in-depth coverage on a local, regional and national scale. Backed by a team of meteorologists and in-field reporters, AccuWeather provides advanced severe weather warnings and forecasts with Superior AccuracyTM.

“The inclement winter season often means weather news needs to be timely and accurate,” Mike Keyserling, COO and head of content acquisition at Philo, said in a statement. “Philo is focused on bringing new and differentiated content to our service while maintaining value for our subscribers.”

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Sarah Katt, GM of AccuWeather TV Network, said the weather service is “committed to delivering the most accurate and reliable local and breaking coverage,” and looks forward to bringing this “breadth of weather forecasts, news and insights” to Philo.

Philo, which remains the least-expensive option in a niche market that includes AT&T TV, YouTube TV, Hulu + Live TV, Sling TV and FuboTV, currently offers 64 channels and allows three separate streams on three different devices; everyone who shares the account can create their own profile (up to 10 profiles) and have their own sign-in credentials, saved shows, and viewing history.

Philo is available in the U.S. on most Web, mobile, and TV streaming devices, including Apple TV, Amazon Fire TV, Roku, and Google Chromecast via Android. Additionally, subscribers have 30 days unlimited-storage DVR at no additional cost, and can watch thousands of shows and movies on-demand — for an additional fee.

AT&T Dropping ‘Now’ Online TV Service

AT&T has quietly dropped offering new subscriptions to AT&T Now TV, the erstwhile DirecTV Now online television service aimed at replacing traditional pay-TV and competing with Sling TV, Philo TV, YouTube TV and Hulu with Live TV, among others.

AT&T Now TV has been replaced by AT&T TV, which offers consumers three programming options priced from $69.99 to $94.99, with the  more expensive plans featuring a free year of HBO Max. While the addition of Max might seem intriguing, Now TV was priced from $55, with a $79 option including free access to Max.

“AT&T TV Now packages are no longer available for new customers,” reads the AT&T website.

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Now TV (a.k.a. DirecTV Now) was launched on Nov. 28, 2016, with much fanfare for $35 monthly, quickly adding 200,000 subs by the year’s end. The service topped out at 1.86 million subs in 2018, before losing about 1.2 million subs through Sept. 30, 2020 after AT&T instituted price hikes.

AT&T has now hung much of its digital future on HBO Max, with AT&T TV seen as backstop to ongoing DirecTV and AT&T U-verse pay-TV subscriber declines. U-verse lost about 4 million combined subscribers in 2019.

 

FuboTV Teases Strong Year-End Revenue, Sub Growth

FuboTV, the upstart publicly-traded online sports-themed streaming service, hasn’t announced when it would report fourth-quarter fiscal results. But that didn’t stop the New York-based service from disclosing upbeat year-end revenue and subscriber growth numbers.

The platform said it expects Q4 total revenue to be between $94 million  and $98 million, a 77% to 84% increase from the previous-year period. Prior guidance was $80 million to $85 million.

Paid subscribers at the year’s end are expected to exceed 545,000, an increase of more than 72% year-over-year. Prior guidance was 500,000 to 510,000 subscribers.

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“FuboTV’s strong preliminary fourth quarter 2020 results exceeded what was already expected to be a record year for the company, and demonstrate continued consumer excitement for the company’s live TV streaming offering,” co-founder/CEO David Gandler said in a statement. “In 2021, we will continue to be laser focused on executing our growth strategies, which include continuing to grow advertising revenues, working to implement sports wagering into our product and further establishing FuboTV as a leader in sports and live streaming.”

Gandler made no mention on the company’s projected profit/loss. In Q3, FuboTV reported a net loss of $274 million on revenue of $61 million. The company launched an IPO in October that saw shares skyrocket 400% following investor excitement over a live-sports themed online streaming service. Shares have been falling ever since, down more than 60%.

ViacomCBS Expands Distribution With Hulu Online TV Platform

ViacomCBS has its upcoming launch of Paramount+ streaming service, but the media giant hasn’t forgotten about its pay-TV business. The company Jan. 4 announced a new distribution agreement that adds more content from its portfolio of news, entertainment and sports networks to Disney-owned Hulu’s live TV subscription streaming service, Hulu + Live TV — the largest online television platform.

The multiyear deal includes continued carriage of CBS broadcast stations, CBS Sports Network, Pop TV, Smithsonian Channel, and The CW, as well as continued distribution of subscription streaming video service, Showtime. The deal will also introduce 14 additional ViacomCBS networks to Hulu + Live TV, including BET, Comedy Central, MTV, Nickelodeon, Paramount Network, VH1, CMT, Nick Jr., TV Land, BET Her, MTV2, NickToons, TeenNick and MTV Classic.

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“We are excited to have reached an expanded agreement with Hulu that underscores the value of our powerful portfolio of brands to next-generation TV platforms and viewers,” Ray Hopkins, president of U.S. Networks Distribution for ViacomCBS, said in a statement. “Hulu continues to be a great partner, and this agreement ensures that Hulu + Live TV subscribers are now able to enjoy the full breadth of our leading content across news, sports and entertainment for the first time.”

Financial terms of the agreement were not disclosed.

Report: Online TV, Video Subscriptions to Reach 2 Billion Globally by 2025

New data from Juniper Research finds that there will be nearly 2 billion active subscriptions to on-demand video services by 2025, a 65% increase over the end of 2020.

The primary engine for this growth will be from traditional TV broadcasters increasingly turning to streaming video platforms to extend their linear reach and compete with online video behemoths such as Netflix, Amazon Prime Video and Disney+.

The U.K.-based Juniper notes that traditional broadcasters are turning to hybrid services, a combination of subscription- and advertising-supported monetization, such as NBCUniversal’s Peacock and ViacomCBS’s pending Paramount+ (currently CBS All Access), which offer tiered services that generate subscription revenue but show advertising in lower-priced viewer options. Juniper anticipates that these services will account for $1.4 billion in advertising spend by 2025.

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The report contends that as subscription services become increasingly prominent, particularly in the United States, different models will be needed to combat subscription fatigue among consumers. The report estimates that in 2020 there was an average of four SVOD subscriptions per domestic household, but with growth slowing significantly from 2021.

“Thanks to this high level of market saturation, streaming providers need to keep their offerings competitive to retain subscribers,” Nick Hunt, co-author of the report, said in a statement. “Hybrid monetization is one way that VOD providers can keep their offerings low-cost, and therefore less likely to be dropped.”

Juniper projects that more than 70% of streamed video sessions in the next five years will occur on smartphones, thanks to the emergence of social videos on platforms such as TikTok. However, these do not yield a high number of ad spots per video watched, meaning that smartphone advertising spend will only grow at an average rate of 2% each year over the forecast period.

Parks: 20% of U.S. Broadband Homes Use Ad-Supported OTT Video Services

Who says people don’t like ads with their video? The growth of ad-supported VOD and ad-based SVOD continues among consumers. New data from Parks Associates finds 20% of U.S. broadband households currently use an over-the-top video service with ads, and 15% use a “freemium” service, placing these offerings in a strong second place, among streaming video business models.

“There is no clear market leader in the ad-supported and freemium OTT space, with Pluto TV, The Roku Channel, Tubi TV, Peacock and Crackle all scoring relatively similar adoption rates,” Steve Nason with Parks Associates said in a statement. “The newest offering, NBCUniversal’s Peacock, does have the reach, content and profile to disrupt this area, which could further boost usage of ad-based and freemium OTT among U.S. households.”

Parks finds domestic broadband households in Q1 2020 reported spending an average of $16 per month on OTT video service subscriptions, behind $89 per month on pay-TV services. Consumer spending has been shifting toward OTT services and subscriptions as more households cut or trim their pay-TV services.

“A prolonged economic contraction could drive households to reduce pay-TV spending more, while also scrutinizing their OTT service stacks,” Nason said. “Ad-based services will establish a large role within the today’s OTT service space as consumers look for affordable entertainment options.”

MediaKind Bows Online TV Software for Pay-TV Set-Top Devices

MediaKind, a media technology and services company, Dec. 16 announced the launch of Mediaroom Play, software that enables pay-TV operators to deploy set-top boxes with online TV powered by Android TV rapidly.

Mediaroom Play enables pay-TV operators, facing ongoing consumer shifts away from linear television to over-the-top video platforms, to offer an alternative through the adoption of Android TV and its pool of more than 1,000 streaming content providers. Mediaroom Play significantly increases an operator’s aggregation value with access to more than 7,000 applications and video games available on the Google Play Store. The integration also opens up new monetization routes with revenue share opportunities on the Google Play Store and through Google Ads.

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“With this new investment, we are enabling existing and new Mediaroom customers to rapidly launch modern video services that meet today’s consumers’ needs, while also encompassing the vast array of converged experiences offered by Android TV,” chief product officer Raul Aldrey said in a statement. “This pre-integrated solution enables our customers to evolve from being video-only service providers to multi-service providers, tapping into abundant consumer experience offerings.”

In September, MediaKind launched a technology partnership program giving content providers, service providers and operators access to cloud-based software. In 2019, Google Cloud partnered with MediaKind, enabling the company to access Google’s portfolio of solutions and services and tap into an advanced combination of end-to-end TV analytics and machine learning capabilities.

 

Parks: Nearly 10% of U.S. Broadband Households Canceled a Video Service During the Pandemic

New data from Parks Associates research finds that, as of May 2020, 8% of U.S. broadband households canceled at least one video service due to the COVID-19 crisis, including 4% of that canceled a traditional pay-TV service, due in large part to the cancellation of sports programming.

“The lack of sports programming had a significant role in households canceling their pay-TV services early in the pandemic,” senior director Jennifer Kent said in a statement.

Kent contends that with all major sports leagues now resuming play, consumer adoption should bring back many of these canceled households, especially online TV subscribers, who have an easier path to re-subscribe compared to traditional pay-TV.

“However, the ongoing economic crisis could push additional households to trim services,” Kent said. “Service and video providers are shifting to focus on retention and finding ways to keep subscribers through innovative partnerships and unique content.”

Parks reports more than 40% of former pay-TV subs said they would re-subscribe once sports resumed, while more than two-thirds of former online pay-TV subscribers would sign back on.

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Parks: OTT Video Subscriber Loyalty Up as Churn Drops During Pandemic

During a pandemic, consumers gravitate toward experiences they trust. New data from Parks Associates finds the overall annual churn rate for OTT services, representing those subscribers who have canceled a service as a percentage of the current subscriber base, dropped from 46% in 3Q 2019 to 38% in 3Q 2020. As a subset of subscription-based OTT services, online TV services experienced an even more dramatic drop, from 84% in 2019 to 49% in 2020.

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“Households across the U.S. continue to be primarily homebound or more homebound than they have been in prior ‘normal times,'” research director Steve Nason said in a statement. “They have much more time and opportunity to engage and interact with OTT services and are deciding to stick with services, including midsized and smaller ones, longer than normal. Consequently, we are seeing a lower overall churn rate for OTT services.”

Parks found considerably lower churn rates among Netflix, Amazon Prime Video and Hulu than the overall average for all OTT services. The Disney+ churn rate was at 13%, while HBO Max, Apple TV+, and Peacock was around 20%. For online TV, churn rates remain high, but the pandemic has accelerated the migration away from traditional pay-TV services via a cable or satellite provider while also encouraging extended subscriptions.

“Online pay-TV services that offer bundles of live channels, are a direct beneficiary of the move away from traditional pay-TV services,” Nason said. “This trend, along with the return of live sports, is a huge growth accelerant for services such as YouTube TV, Hulu with Live TV, and fuboTV. As a result, the churn rate for online TV, while still hovering near 50%, has been significantly reduced in this latest release.”